China said that it will follow the principle of “mutual understanding and accommodation” to resolve the outstanding issues raised by India for not joining the Beijing-backed mega Regional Comprehensive Economic Partnership (RCEP).
India’s decision not to join the RCEP deal at a summit meeting of the 16-nation bloc, effectively wrecking its aim to create the world’s largest free trade area having half of the world’s population.
Energy Efficiency as a service is gaining traction with innovative models, many of them disruptive. But this could be the game changer at a time when climate change is pervasive and addressing it demands fast and ambitious action.
The India energy efficiency market, a space in which energy services companies (ESCOs) operate, is estimated at Rs. 1.5-lakh crore. And the energy-saving investment potential in India is estimated at Rs. 8,40,852 crore by the year 2031, under a moderate saving scenario with the industrial sector constituting the highest energy-saving investment potential.
India has committed to the UN Framework Convention on Climate Change to reduce its carbon footprint by 30-35% by 2030, with 2005 as the base year.
India has followed a market development model of ESCOs through a market-based comprehensive network and shunned the path of subsidising energy efficiency taken by countries such as China. The total investment made by industry in achieving its targets of energy efficiency so far is estimated at Rs. 60,000 crore.
The Indian real estate market has always been chaotic, affected by the absence of a regulator and a constant mismatch in demand and supply. However, one segment that has frequently acted as its saviour when the chips are down, has been affordable housing. The fundamental reason behind this is that it is not just real estate, but a need for the masses.
The Indian real estate market is undergoing a transformation of sorts post RERA. In the next half-a-decade, it will see a small scale turnaround driven largely by the affordable housing sector. Almost 95% of the country’s population consists of the striving middle class, and the demand in this sector is still huge while supply is limited and there are only a handful dedicated developers.
Developers in the premier and luxury housing segment have been used to high profit margins, whereas the margin in the affordable segment is 10%-15% only. Therefore, just like rapid digitization changed the focus from per unit margin to transacting in volumes, real estate also needs to move towards the volume first model by catering to the demand in affordable housing. … On the other hand, affordable housing projects can also appeal to investors as projects under this segment invariably cost at least 25-30% less than other projects in the same vicinity but outside its ambit.
Additionally, the direct involvement of government and defined project specifications make affordable housing projects more attractive and secure for home buyers. Strict completion deadlines, lack of opportunities for manipulation and easy possession transfer under RERA have built the confidence of buyers in this segment. Smaller ticket sizes also make it more marketable, and the government’s frequent interest rate drops and the enthusiasm of both public and private sector banks to extend easier home loan facilities boosts its prospects.
The Union Budget 2019 included provisions that substantially push the demand for affordable housing…. These steps have significantly boosted demand, turning many fence-sitters awaiting sops into potential home buyers. However, a lot remains still to be done, as the government has already failed to keep pace with supply hovering at 15.3 million houses from 2014-2018 under PMAY, way behind the target of 2 crores set by the government….. As per industry reports, a growth of 22% in sales during 2018. Sales increased by 16% in 2018 in the top 7 cities, as compared to the previous year, though the prices of properties largely remained the same. The budget has only boosted this trend further.
A major realignment in the right direction can be seen with the increasing consolidation within the sector from national and regional developers. With players in the market giving specialisation more importance, they are realising that it is a key factor, especially in the affordable segment. This is where local developers and landowners with the experience and expertise of a particular place are partnering with larger developers to unlock their land values under PMAY.
Government subsidies such as lower GST rates and higher tax rebates are leading to a rise in disposable incomes and, as a result, a greater demand for affordable houses… With this, it is expected that more launches will take place under PMAY within the next 6 months and developers need to step up and utilise the newly introduced benefits to overcome the shortage of 19 million houses in urban India.
The Housing for All by 2022 scheme will also facilitate. In the long run, it would be interesting to see if the centre decides to increase houses under PMAY to 60 sq. m., unlocks land parcels owned by it and increases the limit from 45 lakhs. With this, it may be able to steer millennial and young professionals back to the trend of home ownership, which is otherwise on its way to becoming obsolete in today’s shared economy. Several incentives and regulations have already started changing the dynamics of the real estate sector, and the adaptability of real estate players adapt to these changes will determine the sector’s eventual success.
Highway developers have sought changes in the build-operate-transfer (BOT) contract format to make it ‘more realistic and friendly’ towards the concessionaires and enabling tying up of funds from the lenders. The share of BOT (toll) project awards has come down to naught in the last two years from its peak of 96% in 2012.
Mr Virendra D Mhaiskar, MD, IRB Infrastructure Developers said that we don’t have a problem in taking BOT projects but we want the National Highways Authority of India (NHAI) to be more realistic in determining the total project cost (TPC). Historically, differences in NHAI TPC vis-a-vis developers’ cost lead to apathy by lenders in funding BOT projects.
In BOT toll concessions, there is no provision for the payment in case of escalation in basic cost for the raw materials like cement, steel, bitumen and fuel. The escalation should be compensated to the concessionaire for these items and may be fixed at the bidding stage itself, it said.
Crisil Infrastructure Advisory director Akshay Purkayastha said to revive the BOT model, it is important to address some fundamental issues. First, projects should only be awarded if minimum 90% land has been acquired and all necessary clearances (in particular environment and forests) have been procured. Second, there has to be a mechanism to reconcile NHAI’s TPC and the lenders’ TPC to provide comfort, particularly in the event of termination. Third, the present definition of ‘competing roads’ has to be widened to protect the concessionaire for revenue loss.
Icra assistant vice-president Abhishek Gupta said the revival of interest in BOT projects will hinge on three key factors like balanced distribution of risk in public-private-partnership (PPP), availability of financing, and attractiveness of projects being offered. In addition, the mechanism of claims settlement can also be further strengthened and fast-tracked.
The government has also started working on making BOT model friendlier to the concessionaires. A source said we have noticed that a majority of disputes and delays arising in BOT (toll) projects are due to delays in land acquisition and statutory clearances such as forests and environment by NHAI. So, in the MCA, we have proposed that NHAI shouldn’t give the appointed date without fulfilling all the responsibilities. There should also be no option for waiver of conditions precedent by either party.
After a three-year action agenda and five-year strategy paper, the NITI Aayog is now preparing a 15-year Vision Document (FY21-FY35) to link the government policies and expenditure to the long-term economic, social and sustainable development goals. The Vision Document will give a perspective about the size of India’s GDP by 2047, the 100th year of independence. In this context, the document will underline various economic and social goals to
be achieved by FY35, an official reported to media.
The document, which will have 24 chapters, will be prepared by March-April 2020. The themes to be covered under the document include growth, investment and employment; infrastructure and transport; industry; water and land resources; data and public policy; ease of living; banking and finance; communication and digital technology; energy and education.
The government think-tank came out with a three-year action agenda covering the period from FY18 to FY20 and a five year action strategy (FY19-FY23) to steer economic growth to an average 8%.